Net Operating Income (NOI) Calculator

Calculate net operating income of a property with area, rental rates and expenses.

Result Full Rental $0 Potential Gross Income $0 Vacancy Loss $0 Effective Gross Income $0 Operating Expense $0 Net Operating Income $0

Full Rental Formula

Full rental = Area * Rental per square area

1800 * 3400 = $6120000.John rents out his property for $6120000, which equals 1800 * 3400 square areas. The annual rent from this property is equivalent to its entire market value.

Potential Gross Income Formula

Potential gross income = Full rental + Other income

$15300 + $8700 = $24000.John's full rental income was $15,300, and he also earned $8,700 from other sources. His total potential gross income would be $24,000 per year. The result number represents John's combined annual income from both his full rental income and other sources, used to calculate his potential gross income.

Vacancy Loss Formula

Vacancy loss = Full rental * ( 1 - Occupancy rate / 100 )

$10400 * ( 1.0 - 29% / 100.0 ) = $7384.0.If a property owner retains $10,400 in rental income and has an occupancy rate of 29%, the vacancy loss would be $7384. The vacancy loss of $7,384 means that if the property is only occupied by 71% (100% - 29%) of its potential capacity, the owner would lose $7,384 per year due to unrented space.

Effective Gross Income Formula

Effective gross income = Potential gross income - Vacancy loss

$8200 - $12600 = $-4400.The formula applies to John, who earns $8200 gross income and loses $12600 in vacancy, resulting in a negative effective gross income of -$4400. The result number means that if John had to pay $4400 due to vacancy loss, his actual take-home pay would be -$4400, indicating he is operating at a net loss.

Operating Expense Formula

Operating expense = Property tax + Property management fees + Insurance + Maintenance + Repair + Other operating expenses

$6700 + $9900 + $1000 + $2700 + $15000 + $1700 = $37000.The formula calculates the total operating expenses for a property, resulting in $37,000. This amount represents the combined costs associated with maintaining and managing the property over a certain period.

Net Operating Income Formula

Net operating income = Effective gross income - Operating expense

$5600 - $7700 = $-2100.John's company had a net operating income of $5600, and its effective gross income was $7700. This resulted in an operating expense of $2100. The net operating loss of $2100 means the company is operating at a significant loss.

Meaning

The Net Operating Income (NOI) is a financial metric that represents the total income generated by an investment property or business after deducting all operational expenses, such as utilities, maintenance, and management fees. It provides a clear picture of a property's or business's ability to generate cash flow without considering any non-operating income or expenses.